The Securities and Exchange Commission is investigating Microsoft Corp.'s accounting practices regarding its financial reserves, the software giant said yesterday.

Microsoft said it does not specifically know what the SEC is examining but said it was notified of the investigation shortly after a Wall Street Journal article, published in January, detailed a former Microsoft internal auditor's allegations that the company manipulated its revenue reserves to ensure the stability of its quarterly profits.

The auditor, Charles Pancerzewski, has claimed in a wrongful termination lawsuit that Microsoft has engaged in "cookie jar" accounting, holding back some revenue in fat quarters to pad out results in leaner quarters. Microsoft, known for its financial stability, has long posted earnings that regularly match or surpass the estimates of industry analysts.

In a conference call yesterday evening with reporters and analysts to disclose the investigation, Microsoft Chief Financial Officer Greg Maffei said the firm will change the way it accounts for the sales of its dominant Windows and Office software, counting a greater portion of the revenue up front instead of spreading it out over several quarters. Maffei said the accounting changes are not related to the SEC investigation.

"We are a company known for conservatism, and I would be surprised if anyone were to look at our books and suggest otherwise," Maffei said. He said the company was cooperating with the SEC.

Maffei said the accounting changes would have a minor fiscal impact on the company. He advised financial analysts to raise their earnings estimates by one cent for the quarter ended yesterday and by one cent for the entire fiscal year beginning today. On average, analysts expected Microsoft to earn 35 cents a share in its fiscal fourth quarter, which ended yesterday, according to First Call Inc.

The SEC, which would not comment on the issue yesterday, has increased its scrutiny of firms it believes are holding improperly large revenue reserves. "The theory is that companies will inflate reserves for the purpose of smoothing out or managing earnings," said Robert Willens, a managing director at Lehman Brothers in New York.

In the past, Microsoft has held back between 20 percent and 35 percent of the revenue of its popular software products to cover costs of supporting customers, such as providing technical assistance over the phone. The company also has counted the development of its Internet Explorer browser, which it believes is an integrated feature of Windows, as an ongoing support cost.

With the accounting changes announced yesterday, Microsoft now will hold back between 15 percent and 25 percent of product revenue.

Maffei said the company was making the change in response to new SEC rules governing the way companies value components of their business that are delivered in the future.